The king of clubs

From peep shows and adult magazines to lap dances and body shots, Peter Hafiz and his family have controlled the wilder side of Twin Cities nightlife for more than 30 years. Hafiz is well-regarded by city officials and peers, but his long-time partner has run afoul of the law and has had ties to organized crime.

Peter Hafiz claims that every man in the Twin Cities over the age of 18 has been inside his Déjà Vu strip club.

Like any good boast, this one contains a grain of truth. Since it opened in downtown Minneapolis two decades ago, the all-nude nightspot has shown remarkable staying power.

So has Hafiz.

At 51, he is the homegrown king of clubs in downtown Minneapolis, with an empire of strip joints (Déjà Vu and Dream Girls), gay bars (the Gay 90's and Brass Rail) and one of the busiest party spots in the metro area: Sneaky Pete's.

When his family's adults-only Faust Theater was bought out by the City of St. Paul in 1989, the Hafiz family moved across the river to a down-on-its-heels Minneapolis Warehouse District zoned to group adult businesses together.

Much has changed in the neighborhood since then. The nearby North Loop has filled in with lofts, condos and apartments. Fashionable restaurants and bars spill out into sidewalk cafes. Last year's opening of Target Field cast a brighter light on Hafiz's portfolio of property, much of it within a few blocks of the ballpark.

By most accounts, he runs a clean operation and hits his marks with city regulators. His clubs seldom generate the kinds of controversies that pressured the family business out of St. Paul. "I've had nothing but positive experiences with him," said Minneapolis City Council Member Lisa Goodman, whose 7th Ward covers most of downtown.

But helping to finance many Hafiz enterprises is a partner who has run afoul of the law before.

For more than three decades, the Hafiz family in the Twin Cities has worked with Harry Mohney, a businessman operating out of Michigan and Nevada who was considered by prosecutors in the late 1980s to be one of the nation's largest X-rated entrepreneurs.

Mohney, whose operations then were estimated to be worth $100 million, is the central figure in the Déjà Vu chain, with more than 50 lap-dancing clubs that stretch from California to Paris, as well as other sex-oriented businesses. Mohney even has his own museum of erotica in Las Vegas. With his son, Jason, and porn publisher Larry Flynt, he recently opened a 70,000-square-foot Hustler strip club in Vegas.

The Mohney enterprise's maze-like corporate structure has bedeviled lawyers battling him in court. He was sent to prison for tax evasion in the 1990s. Prosecutors describe him as a sophisticated operator who keeps his name off documents and stays behind the scenes.

Parts of Mohney's operations were revealed in a recent class-action lawsuit brought against the Déjà Vu chain on behalf of more than 25,000 female dancers. The plaintiffs allege that they were cheated out of pay. Hafiz's two Minneapolis clubs are part of the suit. An $11 million settlement in the dancers' favor awaits a Michigan judge's final approval (and an inevitable appeal).

In more recent years, business ties between Hafiz and Mohney have continued. Neither family will discuss it, and Hafiz ignored multiple interview requests for this article. Also declining to comment were his younger brother, Stewart, 46, who runs Sneaky Pete's, and Hafiz's sister, Leslie, 48, who works at Déjà Vu. Jason Mohney asked to see a list of questions; he did not reply to them.

But property records, court filings and interviews with those who know Hafiz offer a glimpse of his world.

Sneaky Pete, property owner

With a two-level sports bar by day that morphs into an over-the-top party bar at night, Sneaky Pete's is among the busiest and most lucrative nightspots in the Twin Cities. Four years after opening, it attracts long lines of patrons outside on weekends.

Peter Hafiz usually arrives at the club after 10 p.m.

"Peter is like a celebrity," said former bartender Jason Breezee.

He buys customers shots, smokes cigars on the patio and hangs out with Minnesota Wild hockey players who frequent his bar.

"It's nothing for me to come in here every night and shake 200 hands," Hafiz told the Star Tribune in a 2008 interview.

Hafiz favors dress shirts unbuttoned at the top to reveal a tuft of chest hair and dangling gold jewelry, including a cross. A thick goatee frames his constant smile.

"I don't see the flashy, braggadocio side to him," said Dino Perlman, owner of the Seville strip club near Target Center. "I see a humble guy."

Away from downtown, family dinners and church are routine for Hafiz, friends say. He drives American cars: a Hummer, Dodge Ram pickup, Lincoln sedan and Cadillac Escalade are registered in his name. He owns a condo in downtown Minneapolis, but the longtime family base is in Woodbury. He owns two houses there, one for his mother, Eleanor, 76, who has worked in the family business, and the other (valued at about $580,000, with a swimming pool and a black metal fence) for Catherine Ziton, 50, the mother of Hafiz's teenage daughter.

Recently, Hafiz took his family to Mexico. Associates say he was chaperoning his 18-year-old daughter on spring break.

St. Paul buys a porn theater

Hafiz's own upbringing was closely linked to his father and the world of adult-oriented commerce.

In the summer of 1988, Hafiz was 28 and working for his dad at the Faust Theater at Dale Street and W. University Avenue in St. Paul.

A man who had taken a small amount of cash from the register stabbed Hafiz in the chest and abdomen. Hafiz grabbed a gun and chased the man 150 feet before collapsing on the sidewalk.

The elder Hafiz, James Jr., was prominent in St. Paul's sex business. With backing from Harry Mohney, James turned the Faust into an adult-entertainment supermarket, popular for its 25-cent peep shows.

St. Paul officials, led by City Council Member Kiki Sonnen, despised it. Porn protesters picketed it and the Hafiz home in Woodbury. At the time, Peter Hafiz told the Star Tribune that the protests made his father "fight that much harder for his right to give people the choice to come in and view the material we offer." A close friend says Hafiz idolized his father, who grew up on St. Paul's West Side and was of Lebanese descent. James Hafiz died of a heart attack in 1990.

In 1989, the city brokered a deal in which it bought the business for $1.8 million and the Hafiz-Mohney partnership agreed not to reopen in St. Paul. The city eventually razed the building.

But the family wasn't done with the sex business. Hafiz plunged headlong into Minneapolis' blossoming culture of adult entertainment, now centralized by zoning ordinances in the Warehouse District.

With Harry Mohney as a 75 percent partner, Hafiz purchased the Kaufman Sign building at 315 Washington Av. N. for about $250,000. They painted the 10,000-square-foot building pink and hung an awning that read: "100s of beautiful girls and 3 ugly ones." In 1990, Minneapolis' first upscale all-nude strip club, Déjà Vu, was born.

A few years later, Hafiz opened Dream Girls in downtown Minneapolis. Like Déjà Vu, it is all-nude and part of the Mohneys' national chain.

Mohneys vs. pols

The Mohney connection also caused problems for the Hafiz family.

The 1986 Meese Report on pornography, ordered by President Ronald Reagan, linked Mohney to the Colombo and DeCavalcante crime families and their East Coast porn operations.

In 1989, Mohney was convicted of filing false tax returns, a felony that resulted in a three-year prison sentence.

In 1994, Minneapolis denied Peter's siblings, Leslie and Richard Hafiz, a liquor license for Augie's strip club, with council members alleging that the two had tried to conceal their business ties to Mohney. Soon afterward, the Hafiz-Mohney partnership unsuccessfully sought liquor and exotic-dancing licenses for two Washington Avenue storefronts.

In recent years, Mohney's son Jason has become more deeply involved in the clubs. Last year, a San Diego judge, concerned over his handling of a bankruptcy filing for a strip club, issued a finding calling Jason "dishonest" no fewer than eight times. The judge turned the matter over to the U.S. Attorney's office, which won't confirm or deny an investigation.

Hafiz went it alone to obtain a liquor license for Sneaky Pete's in 2007. City records show him as sole owner.

$11 million to nude dancers

The most recent trouble facing the Mohney empire -- and Hafiz, by extension -- is the class-action suit brought against its Déjà Vu chain.

Dancers perform on a large horseshoe-shaped stage. Directly above is the second level's stage, with a transparent floor. On weekend nights, the DJ promotes a free hot-dog buffet.

Déjà Vu dancers make most of their money from lap dances, priced from $20 to $100. Floor managers monitor the dances to tabulate the club's take -- about 30 percent of each one.

In her best-selling 2006 memoir, stripper-turned-writer Diablo Cody described the Minneapolis Déjà Vu, where she worked for several months, as "a pink gulag."

Several ex-dancers interviewed by the Star Tribune echoed those sentiments.

"There's always girls in the dressing room crying," said 23-year-old former dancer Ashley Venzke. "It's like a bad relationship."

The club, along with Dream Girls a few blocks away, is among those named in a class-action suit filed in 2008. The suit, filed on behalf of dancers, names a long list of defendants including a Michigan company called Cin-Lan Inc. with Harry Mohney as chief operator, Harry Mohney himself, Deja Vu Consulting as well as 72 clubs. The dancers claimed that Déjà Vu managers routinely withhold money from dancers, improperly classifying them as independent contractors instead of employees.

One lawyer representing dancers described the case as "bare-knuckled, trench-warfare litigation." Documents in the case present one of the most complete descriptions to date of Mohney's empire, which a Detroit judge likened to "a shell game, possibly aimed at avoiding liability."

Harry Mohney, nearing 70, is employed by Déjà Vu as a consultant for 40 to 60 clubs. Déjà Vu Consulting is owned by Dynamic Industries Inc., which is owned by the Jason Cash H. Mohney Trust. Harry Mohney removed himself as a beneficiary of that trust, partly because his criminal past got in the way of companies owned by the trust getting liquor licenses, say court records.

San Diego lawyer David Miller, who has sued clubs three times on behalf of ex-dancers, said the Mohneys have lieutenants who run day-to-day operations at each club, guided by a manual written by Mohney.

"He likes to keep his personal distance, but he likes to maintain control," Miller said.

He also likes airplanes. In 2009, Mohney bought a super-fast SJ30 business jet made by now-defunct Emivest, which he uses to manage his Déjà Vu business. The planes were selling for $8 million.

Mohneys very involved

In downtown Minneapolis, friends and rivals peg Hafiz as a major real estate holder, with buildings totaling about 67,000 square feet.

Public records indicate he doesn't operate alone. Mohney companies, not Hafiz, are listed as taxpaying entities of three of the Warehouse District properties, and as partners in two others. Liquor licenses show that Jason Mohney has a 51 percent ownership of the Gay 90's and the Brass Rail businesses, while Hafiz commands 49 percent.

One of Hafiz's most talked-about properties is the vacant building at 4th Street and 2nd Avenue N. that once housed the New French Cafe and Urban Wildlife. Property records indicate a Mohney affiliate bought the corner for $3.3 million in 2006.

Technically, it's owned by Marquee Properties LLC, one of three different LLC owners of downtown Minneapolis properties that are headquartered in Durand, Mich., a town west of Detroit where Harry Mohney got his start. Although Mohney lives in Las Vegas and San Diego now, the Michigan address remains home to Modern Bookkeeping, a company that does accounting for various Mohney enterprises.

But after two decades of building his fiefdom with backing from Mohney, Hafiz has hit some roadblocks.

About three years ago, he sought to tear down the New French Cafe building to create a three-level nightclub. The Heritage Preservation Commission denied the request, saying the building deserved protection.

Council Member Goodman said Hafiz handled the denial "completely gentlemanly, unlike others, who would have threatened litigation." (Hafiz, like many club and restaurant owners downtown, has made small campaign donations to Goodman.) The building has since fallen further into disrepair -- a sore spot for Warehouse District boosters.

In 2008, Hafiz bought the Gay 90's for $2 million, sparking fear that he would turn it into a strip club. Instead, he pledged to remodel it with a rooftop bar and wedding chapel. So far, Hafiz has only completed work on one of the first-floor bars.

Last summer, Hafiz revealed plans for a club -- Spank the Donkey -- in the building next to the New French Cafe building. It would be "Sneaky Pete's on steroids," he said. Earlier this year, Stewart Hafiz said the project was on hold, citing a weak economy.

Hafiz is tight-lipped about his plans. The Mohneys are even quieter. But business rolls on. The men's magazine Maxim recently named Sneaky Pete's one of the "best sports bars in America." Déjà Vu waives its cover charge for anyone with a Twins ticket stub.

Jimmy Pesis, who sold Hafiz and the Mohneys the building that Sneaky Pete's and Dream Girls is in, said he doesn't have a clue what Hafiz plans for the old New French Cafe corner.